Traders can look to sell the stock on a bounce for a target of Rs 430-500 levels in the next 3 months, suggest experts.
The stock hit a 52-week high of Rs 807 on 5th December 2022, but it failed to hold on to the momentum. It closed at Rs 604 on 8th August 2023 which translates into a fall of over 25%.
A fall of over 20% or more in a stock from the recent high is considered as a bear grip.
The stock recently broke below the June 23rd 2022 low of Rs 607 earlier this week. The stock closed at Rs 604 on 8th August 2023. It hit a 52-week low of Rs 590 on 3rd August 2023.
“UPL stock is near its 52-week low and has broken through the Rs 629 support level amid increasing volumes. According to the Dow theory, if a stock has lost more than 20% of its value since its high, the trend has shifted from bullish to bearish,” Suraj Bathija, Founder & CSO at AlgoBulls, said.
“The stock has entered a negative zone due to the 264-point difference between the peak of Rs 864 and the CMP of Rs 600, which is more than 20% below the peak. Furthermore, the weekly RSI has fallen below 40, indicating a bearish trend,” he said.
The stock has been under pressure. It has fallen more than 2% in a week and more than 8% in a month. It fell more than 14% in the last 3 months, Trendlyne data showed.
The daily Relative Strength Index (RSI) is 27.5. RSI below 30 is oversold. This implies that stock may rebound. Daily MACD is below its signal and center line, this is a strong bearish indicator.
In terms of price action, the stock is trading above the 5-DMA but below 10,20,30,50,100 and 200-DMA on the daily charts.
“Since February 2022, the RSI has not risen above 60, indicating that sellers are strong and encountering resistance as a result of significant selling. The stock has also formed a rounded top and a breakdown with higher-than-usual volumes,” highlighted Bathija.
“If we pay close attention, we can see that the red candle volumes are greater on a daily basis than the importance of the green candle. SMA 5 has been regarded as resistance since July 2023 and is generally respected,” he added.
“If the stock is held in the portfolio, it can be sold with targets of Rs 510 and Rs 435 in the coming quarter,” recommends Bathija.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)